ICBC contributes to debt rescheduling — via an interest rate reduction — of its $96 million USD contribution to the $445 million USD term loan tranche of a $519 million USD syndicated loan for the 940 MW Lordstown Energy Center (LEC) Project (Linked to Record ID#106213 and #106217)

Project narrative

On April 6, 2016, financial close was reached on a deal in which a syndicate of eight banks — including the Industrial and Commercial Bank of China (ICBC) — entered into a $519.00 million USD syndicated loan agreement with Clean Energy Future - Lordstown, LLC — a United States-incorporated special purpose vehicle jointly owned by MIP III US Energy Holdings LLC (69.79% equity stake), Siemens Financial Services GmbH (SFS) (26.05% equity stake), and Clean Energy Future, LLC (4.16% equity stake) — for the 940 MW Lordstown Energy Center (LEC) Project. This loan was divided into two tranches: a $445.00 million USD term loan tranche and a $74.00 million USD letter of credit tranche. The term loan tranche carried a maturity period of construction plus six years (seven years and months) and a final maturity date of September 30, 2023 (a maturity of 7.488 years) and an interest rate of LIBOR plus a margin of 325 basis points (bps). ICBC contributed $96.00 million USD to the $445 million USD term loan tranche. Record ID#106213 captures ICBC's contribution. In addition to ICBC, the following lenders contributed the respective amounts to the loan syndicate: Bank of America Merrill Lynch (BAML) ($85.75 million USD), Crédit Agricole Group ($40.05 million USD), Landesbank Hessen-Thüringen (Helaba) ($40.00 million USD), Investec Bank ($70.00 million USD), KeyBanc Capital Market Inc. (KBCM) ($34.00 million USD), Société Générale S.A. (SocGen) ($43.20 million USD), and SunTrust Bank ($36.00 million USD). ICBC contributed $24.00 million USD to the $74 million USD letter of credit tranche. AidData does not consider letters of credits to be flows. BAML ($14.25 million USD), Crédit Agricole Group ($9.95 million USD), KBCM ($6.00 million USD), SocGen ($10.80 million USD), and SunTrust Bank ($9.00 million USD). BAML, Crédit Agricole, ICBC, and Investec served as coordinating lead arrangers. Helaba, KeyBank, SocGen, and SunTrust served as joint lead arrangers. The loan was downsized from its initial $600 million USD target, giving the project a debt-to-equity: ratio of 50:50 for the $891.96 million US D project. Macquarie provided 73% of the equity investment and SFS provided 27%, with Clean Energy Future as the developer retaining an interest. The proceeds were to be used by the borrower to finance the construction of the Lordstown Energy Center (LEC), a 940 MW natural gas-fired combined-cycle gas turbine electric power generation facility and supporting transmission infrastructure located in Lordstown, Trumbull County, Ohio about 50 miles southeast of Cleveland. Power generated would be delivered into the PJM Interconnection. LEC featured two efficient H-class gas turbines, one steam turbine, two air-cooled generators, one hydrogen-cooled steam generator, two NEM heat recovery system generators, one emergency diesel generator, an auxiliary boiler, an emergency fire pump, a mechanical draft cooling tower, multiple storage tanks, and emission control equipment such as dry low NOx burners, two catalytic oxidation systems, two selective catalytic reduction systems, and a high-efficiency drift eliminator. The plant also included Clean-Ramp technology, integrating with the gas turbine combustion system control to maintain emissions at 2ppm NOx and 2ppm CO during ramping, allowing to reduce turbine start-up emissions by up to 95%. The plant would use locally sourced natural gas from the Utica and Marcellus shales. The plant would be able enough energy to power 800,000 homes and help replace retired coal-fired generation. Siemens AG won a $800 million USD contract to serve as the turnkey engineering, procurement, and construction (EPC) contractor; it was responsible for the supply of two SGT6-8000H gas turbines, one SST-5000 steam turbine, two SGen-1200A generators, one SGen-2000H generator, a SPPA-T3000 integrated plant control system, and advanced remote monitoring and diagnostic services via a long-term service agreement. Kokosing Construction served as general contractor under Siemens' direction. Mannik Smith Group provided environmental, ecological, geotechnical, and surveying services. CDM-Smith provided service for water infrastructure and wastewater systems. M&J Electric worked on the transmissions lines and substations. Construction was expected to include up to 450 jobs during construction with permanent employment for 20 once the plant was operational. Clean Energy Future entered into an agreement in 2015 for a 15-year tax payment plan to pay millions of dollars to the Lordstown School District. On September 2015, the Ohio Power Sitting Board approved the project. The project was expected to be completed by May 2018. Formal groundbreaking occurred on June 5, 2016. Commercial operations began on October 9, 2018. ICBC's involvement in financing the LEC Project became the source of local controversy. In August 2019, a group called Ohioans for Energy Security began a $1 million USD television and radio ad campaign with a 60-second spot featuring images of Chinese President Xi Jinping and Chinese officials in suits claiming that China was interfering with the American economy and the Ohio electric grid with narration telling viewers to not sign a petition supporting a referendum on House Bill 6, which was signed into Ohio state law in 2019 providing a $150 million USD per year subsidy for nuclear energy in Ohio beginning in 2021 to help prevent the closure of the two nuclear energy stations in the state. The bill was opposed by many environmental, businesses, and industry groups, including the natural gas companies. ICBC had contributed to syndicated loans for the Oregon Clean Energy Center, the Carroll County Energy facility, and the Lordstown Energy Center. This allowed supporters of House Bill 6, such as the nuclear energy industry, to claim that the Chinese government was attempting to take control of Ohio's natural-gas fired plants, even though lending does not mean control (and ICBC was in a syndicate for those loans with other foreign banks) and the federal government via the Committee on Foreign Investment in the United States had the ability to prevent projects from proceeding if foreign investment posed national security risks (the owners of the nuclear plants in Ohio, FirstEnergy, had previously received loans from ICBC). Ohioans for Energy Security claimed that China was attempting to steal Ohio jobs, take over the electric grid and other energy infrastructure, and meddling in Ohio elections. Analysts noted that while the grounds of the argument were deeply problematic, the campaign tried to connect local energy issues to the national issues raised by President Donald Trump, who had won Ohio in 2016. The referendum missed its deadline to go on bailout and House Bill 6 went into effect in October 2019. Later in March 2021, House Bill 128 was passed that partially repealed House Bill 6. On February 22, 2019, a syndicate of 11 banks — including ICBC — entered into an amendment and up-sizing agreement with Clean Energy Future - Lordstown, LLC for the $519 million USD syndicated loan; the $445 million USD term loan was increased by $21 million USD to $466 million USD, the letter of credit was reduced to $28.9 million USD, and a $39.5 million USD revolver tranche was added, leaving a $534.4 million USD loan. The interest rate margin of the term loan was reduced from 325 bps to 275 bps, albeit with pricing stepping up by 25 bps in years four and five. Record ID#106216 captures ICBC's contribution to the interest rate reduction. Each of the 11 lenders, including ICBC, contributed $1.91 million USD to the $21 million USD up-sizing. Record ID#106217 captures ICBC's contribution to the up-sizing. In addition to ICBC, the following lenders contributed to the up-sizing: Commonwealth Bank of Australia (CBA), Crédit Agricole Group, Helaba, KEB Hana Bank, Migdal Insurance, Migdal Makefet Pension Funds and Provident Funds, National Australia Bank Limited (NAB), Shinhan Bank, SocGen, and SunTrust Bank. On May 23, 2022, a syndicate of lenders — not including ICBC — entered into a $460.00 million USD syndicated loan agreement with Clean Energy Future - Lordstown, LLC to refinance the existing debt of LEC.